At Berenberg, ESG investment strategies take into account Environmental (E), Social (S) and Governance (G) issues on top of traditional fundamental issues such as micro and macroeconomic information. “ESG investing”, in essence, is a term that is used synonymously with “ethical screening”, “sustainable and responsible investing” and even with “impact investing”.
Many of our clients have their own range of specific ethical criteria through exclusions lists. We have developed strategies and resources to ensure that our investment process can be tailored to their pre-defined values or beliefs.
Sustainable and responsible investing
Companies are evaluated and screened based on their ESG risk and sustainability credentials with a particular emphasis on scrutinizing controversial business practices.
Selection of companies with the intention to generate returns alongside social and environmental impact.
ESG investing is also about understanding companies and countries from a sustainable investment perspective. By addressing ESG issues in our investment decisions, we support to create positive outcomes for the environment and society. The topics that are commonly considered in the E,S and G categories are:
- Climate change
- Environmental pollution
- Eco-friendly technologies
- Greenhouse gas emissions
- Working conditions
- Health and security
- Fair trade products
- Employee relations and diversity
- Support local communities
- Briberey and corruption
- Compensation structure
- Board diversity and structure
- Anti-competitive practices
We understand the value of integrating ESG factors into our investment decisions in order to better manage material ESG risk in our portfolios. We believe that engagement is very important and part and parcel of ESG integration. Our highly experienced portfolio managers actively engage with companies on ESG issues in order to understand company behaviour better, especially their potential growth drivers and to hopefully influence them on being better on sustainability topics. We also integrate ESG factors to ensure that our portfolios contain companies that are fully sustainable.
Berenberg is a signatory to the United Nations supported Principles for Responsible Investment (UNPRI) since August 2018.
We support you in specific ESG fields of action and provide you with comprehensive support regarding the implementation of your individual sustainable investment strategy. Our range of services includes assistance in the formulation of ESG policies and investment guidelines as well as regulatory issues. We also offer training on general and specific ESG content.
Our Berenberg Sustainable World Equities invests worldwide in companies that make a positive impact on the environment and society through their products and services, taking into account Berenberg ESG values. The selection of the companies is carried out "bottom-up", i.e. based on fundamental company data. Correspondingly, the companies should demonstrate above-average structural growth and be able to generate long-term sustainable earnings. In addition, the business model and key business metrics needs to be compelling. The focus is on detailed discussions with analysts and company representatives.
Our Berenberg Sustainable EM Bonds strategy aims to select particularly USD-denominated emerging market sovereign bonds under sustainability aspects and by means of an active, quantitative investment process. This systematic, transparent investment process enables an admixture of ESG-compliant companies from the emerging markets, in addition to a selection of sustainable states with strong fundamentals. The portfolio is under ongoing risk management through active control and if desired static hedging against currency risk vis-a-vis the euro.
The “Berenberg 1590 Stiftung” is a broadly diversified Multi Asset Fund, investing in various asset classes like bonds, equities (max. 25%) and alternative investments (max. 10%). In total, equity investments and alternative investments are limited to 30%. The fund is focused on foundation-specific aspects and Berenberg sustainability criteria, which are essential within the selection process. An active tactical asset allocation, duration and allocations by region and by sector are derived from macroeconomic, fundamental and technical indicators. The investment strategy is implemented via individual securities, investment funds and exchange-traded funds (ETFs) with a focus on Europe. Derivatives can be added for hedging purposes or to optimize returns. The share class is distributing, with distributions taking place on a semi-annual basis.
Our Berenberg Sustainable Euro Bonds invests primarily in EUR-denominated fixed and variable interest bonds with an investment grade rating, taking into account sustainability criteria. The focus is on earmarked bonds and issuers that offer added value for the environment and society and contribute to solving global challenges such as climate change, water shortage or demographic change. In addition to corporate and financial bonds, investments are made in (almost) government bonds and covered bonds. The duration of the capital commitment is actively managed and the portfolio is subject to ongoing risk management.
The Berenberg ESG Policy provides an overview of our ESG philosophy as well as the integration approach of ESG within our Investment Processes.
This policy provides a better understanding and clarity on how we choose our Berenberg ESG Exclusion Criteria.
The Berenberg Proxy Voting Policy is a set of guidelines meant to give an indication of how we would typically recommend on voting.
This policy describes how we conduct active dialogue with companies.
The Berenberg Active Ownership Report describes our 2020 activities in the areas of engagement and proxy voting.